Some start-ups succeed – spectacularly. But most fail. With that in mind, we turned to an expert for insight into the importance of reputation for start-ups.
Jed Weiner, Esq., Head of Corporate at the Washington, D.C. law firm Mei & Mark LLP, advises emerging and seasoned companies and investors in corporate financings, mergers and acquisitions, and other strategic transactions. He serves as outside general counsel for startups and private equity portfolio companies.
What types of start-ups have you advised?
We are “industry agnostic” — we work with clients in manufacturing, biotech, healthcare, tech, waste management and many other industries.
What role does reputation capital play in the success of start-ups?
Succeeding as a start-up is all about reputation and your story. You have to persuade people why you are the right person to invest in. Emotions are a critical aspect of early stage investing. Trust is a key aspect of it.
Ask angel investors what is important, and they’ll say it is the management team, not the product. Often, they are investing in the founder. They invest in you because they believe in you.
When you are selling a business to investors, you are selling an idea. And you are selling a brand: you. If you don’t have a good reputation — which is critical to your story — it is hard to make it. You are also selling an idea to your current and prospective employees. A good reputation is important to them.
If you have a bad reputation or reputation issues, and you have to repair it while launching, your message maybe lost in the noise or you will be spread thin.
Can you talk about what keeps talented founders from launching?
The fear of failing keeps people from starting companies because they are afraid failing will damage their reputations. Many founders in the U.S. have failures under their belt. Failing is common here but it is not a barrier. In Europe, there may be more stigma attached to failing in a business venture. So, many Europeans are more at ease launching a start up here.
How do you advise clients to amplify their reputations?
One important way is to establish an advisory board. Advisory boards do not have fiduciary responsibilities and you can compensate them with equity grants rather than cash compensation. That is a very good way to communicate endorsements from credible sources.
Cultivating referrals from people who have good reputations is also key. A referral requires trust, because the referral source is backing you up.
Communicating prior success in whatever else you did helps.
Launching a pilot program for your product is a good way to build a reputation for it and to gain feedback and support for it.
Joining an accelerator and participating in awards programs appropriate for your industry lends visibility to your achievements and vision. Both build connections and trust.
When you launch a start-up, you have 10 minutes to pitch. Any reputation issue creates noise. It distracts. You want all noise out of that opportunity.
Jed Weiner, Esq. is Head of Corporate at Washington, D.C. law firm Mei & Mark LLP. He spent eight years at Cravath, Swaine & Moore and Simpson Thacher. In addition, he worked in-house for an automotive startup and private equity portfolio company. Jed’s practice currently focuses on private placements, M&A transactions, commercial transactions, cross-border operations, and distribution channels. He is a graduate of NYU School of Law. He also received an MPhil from St. Antony’s College, University of Oxford, and served as an intelligence officer (LCDR) in the U.S. Navy.
This is part of our continuing series of interviews with experts whose work relates to online reputation management.